The Bulls and the Bears are locked in a fearsome battle on the world's financial markets.
Anyone who came into 2016 with bullish expectations has had to temper those thoughts with a long and hard look at current economic realities.
Q4 retail sales figures in the United States came in under expectations, and this lackluster performance heading into the busiest quarter of the financial year has given many economists, analysts and traders pause.
It is especially surprising given that we are going through one of the most interesting economic cycles in recent history: gasoline prices are at multi-year lows, and every single one of us should be able to either save more money or spend more money.
The fact that this is not being reflected in higher retail sales growth from the biggest national retail outlets and multi-national conglomerates is a little concerning.
But there is so much more to this story than meets the eye; while the personal disposable income levels of every one of us may be increasing with lower gasoline prices (owing to crude oil prices below $32 per barrel), the savings at the pump are being spent elsewhere.
A consumption shift has taken place in society, notably the U.S., where millennials are the largest component of the economy with more than 90 million people falling into that category.
Shifting Demographics Mean Shifting Consumption
And what, pray tell, do millennials perceive as most important in their daily lives?
They are more concerned with enjoying life by way of leisure related activity such as coffee bars, pubs, clubs, music concerts, shared music, carpooling, renting accommodation, living with their parents for longer (or relatives) and generally having more cash in their pockets to live day-to-day life with.
Does this mean that this specific generation is less concerned with saving for the future? Are they not investing in equities markets? Are they not purchasing more from retail outlets?
First of all, it's important to define precisely who a millennial is. Millennials are comprised of anyone who is under the age of 35 and there are mega millions of these people in the U.S. and worldwide.
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These people do not value assets and possessions as much as Generation X or the Baby Boomers.
So when we are trying to ascertain how to generate a budget and plan for your well-being in 2016, it is important to understand precisely what it is that you want in your financial future.
Economists propose that regardless of your demographic position in the broader scheme of things, there is always a careful allocation of resources that you should adhere to in order to remain stable and prosperous in the year ahead.
These include the following:
Allocate a Budget to Your Day-to-Day and Monthly Living Activities
This should include things like a transportation allowance, food allowance, entertainment allowance, educational allowance, maintenance and repairs allowance, and so forth.
Budgeting is the most critical control mechanism available to you when you are planning your financial future.
If you accept that planning is at the heart of all success, you will never go wrong with the creation of a well thought out budget which takes into account as many externalities and variables as possible.
Don't be afraid to err on the side of caution; life is what happens while you're busy making plans.
Balance Your Work and Leisure Time
Everybody enjoys leisure time more so than they enjoy working – that's human nature.
However time spent having fun is time not spent working and earning. This should be factored in to your equation when you are working out a financial budget for 2016.
It is reasonable to expect that you may be working a 32 hour to 48 hour work week, perhaps with flexi time, part-time work, freelance work or consulting work as your main sources of income.
Today's employee is more mobile, integrated, flexible, communicative and skill diverse than at any point in history.
The Internet has revolutionized the way that we work and it also allows for a much more meaningful allocation of resources that are customized to our individual circumstances.
Viewed differently, it is in your best interest to maximize your time since time spent wisely is a life lived well.
Related Article: 4 Ways You Can Attract Millennials and Why You’ll Want to Hire Them
Live for Today but Plan for Tomorrow
This is something that many hedonists fail to take into consideration. While yesterday is gone and all we have is today, the promise of tomorrow is something that everybody looks forward to.
Therefore, it makes sense to put aside a little money from today for tomorrow – the proverbial rainy day syndrome.
As predictable as we would like to perceive our lives to be, life is anything but predictable. Jobs come and jobs go, health and wellness is not guaranteed and bearish markets are just as likely as bullish markets.
The difference between those who succeed in life and those who fail at any given time is rooted in strategic planning.
Remember this: if you don't know where you're going, all roads will take you there. Therefore it is imperative to plan for the future in the best possible way by allocating a percentage of your income to things like retirement funds (401(k), Roth IRA, shares, mutual funds, ETF's) or simple savings accounts, treasuries and bonds.
You may not see the point of doing this in the present, but you will thank yourself in the future for having been wise.
Prioritize Your Luxury Spending
Do you really need that coffee at Starbucks today? This is something that I like to promote since that $5 or $6 that you spend at Starbucks perhaps on a daily basis is better spent in a savings or retirement account for that rainy day that we know is coming.
A cup of coffee a day at Starbucks can set you back $150 per month. Over the course of 2016 that translates into $1,800.
Ask yourself this: do you really need to be spending that much money on a cup of coffee a day every day? If you can cut that figure in half, that's almost $1,000 a year that you can set aside for something far more valuable to you.
Too many of us are penny wise and pound foolish, and this is one way that you can take your power back.
Remember, being sensible about your budget for 2016 does not mean that you would forego all activities that give you pleasure.
On the contrary. There are so many things you can do that do not require you to part with your hard-earned money.
Spending time with friends, walking your dog on the beach, talking over the Internet as opposed to using cellphone minutes, watching movies on Netflix as opposed to going to movies or even spending exorbitant amounts of money on cable television, these are things you can use to pad your financial nest egg moving forward.
These are but a handful of the many ways that you can maximize your current budget without seriously detracting from the utility you derive from your current lifestyle.